r/technology • u/CarciaNerissa • 1d ago

Artificial Intelligence Anthropic logged net loss of over $80 billion in first half of 2026

https://www.reuters.com/business/anthropic-recorded-net-loss-over-80-billion-first-half-this-year-wsj-reports-2026-10-20/
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u/MamaMurpheysGourds 1d ago

Let me help you - try explaining in simplest terms what exactly 'convertible notes and other instruments' means to the unintiated since that seems to be the crux of your comment.

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u/0913856742 23h ago edited 23h ago

You want to start a lemonade stand, but you need $100 to buy lemons and cups.

You don't know how much your business is actually worth yet, so you can't sell a piece of the company directly. Instead of selling part of your stand today, a friend gives you $100 as a special loan called a convertible note.

They say "I’m lending you $100 today. Next year, when a big investor comes in and decides what the lemonade stand is worth, my $100 loan will automatically turn into shares of your company."

Because your friend took a risk on you early, you give them a discount (e.g. they get shares for 20% cheaper than the big investor).

Fast forward one year: Your lemonade stand becomes super popular, and everyone wants to invest. The big investor says your stand is now worth $10,000. Because your stand is worth so much more, the special deal you promised your friend is now worth a lot more money to them.

Accounting rules look at this and say: "You promised them a super valuable deal, which means you owe them more value than before." Even though no cash actually left your bank account, accountants force you to write down a loss on paper to show that your promised deal grew in value.

A 'loss' from a convertible note on a financial report is just a paper / non-cash loss, often occurring because the company is doing well enough that a deal promised to early investors became more valuable.

Let me help you - try explaining ...

Five minutes on Investopedia. Happy now?